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Delta April Traffic Up on Strong Demand

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Leading passenger and cargo carrier Delta Air Lines Inc. (DAL) reported growth in traffic for April 2014 on the back of strong demand in both the domestic and Latin American markets. Passenger revenue per available seat mile (:PRASM) improved 6.0% year over year. The shift of Easter to April this year has positively impacted its April PRASM.

The company’s airline traffic – measured in revenue passenger miles or RPMs, which imply revenue generated per mile per passenger – moved up 7.1% year over year to 16.57 billion. Consolidated capacity (or available seat miles/ASMs) for the month, increased 3.0% from April 2013 to 19.57 billion.

The load factor or percentage of seats filled by passengers leaped 290 basis points (bps) from April 2013 to 84.7%. The company registered a completion factor of 99.9%, with nearly 85.2% of flights on schedule.

For the first four months of 2014, Delta generated RPMs of 61.17 billion (up 4.3% from the corresponding period last year) and ASMs of 73.48 billion (up 2.0% year over year). The load factor improved 190 bps year over year to 83.3%.

In 2014, Delta is expected to generate higher revenues than last year on strong domestic market, capacity discipline, route expansion, cost control measures and customer-focused initiatives. Consequently, investors can look forward to higher returns from this well-placed carrier.

Further, Delta is reaping the benefits of its tie up with Virgin Atlantic as it is picking up in the lucrative New York-London travel route. Owing to its widened network in the U.S. and Europe, Delta-Virgin passengers will now have more flight options from New York and London, which will thus strengthen the prospect of the joint venture.

However, the mega merger between American Airlines and U.S. Airways Group to form American Airlines Group Inc. (AAL) and the subsequent divestment of slots to Southwest Airlines Co. (LUV) and JetBlue Airways Corp. (JBLU) remains a major competitive threat for the company.

Delta presently carries a Zacks Rank #2 (Buy).

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